Annual Reports; Performance Audit - - CA Business And Professions

Section § 26190

This law requires the department to publish an annual report about its activities related to cannabis licensing by March 1 each year, starting from 2023. The report should cover details such as the funds used for cannabis licensing, the number of licenses managed, the time for processing applications, and appeals data. It must also include details on complaints, enforcement actions, penalties, and conditions placed on licenses. For the first report, there's a requirement to specifically assess and suggest regulatory changes needed to prevent issues like monopolies, illegal marijuana markets, underage usage, and environmental damage. It addresses excessive concentration of cannabis businesses in specific areas, using population ratios to measure it.

Beginning on March 1, 2023, and on or before March 1 of each year thereafter, the department shall prepare and submit to the Legislature an annual report on the department’s activities, in compliance with Section 9795 of the Government Code, and post the report on the department’s internet website. The report shall include, but not be limited to, the following information for the previous fiscal year:

(a) The amount of funds allocated and spent by the department for cannabis licensing, enforcement, and administration.

(b) The number of state licenses issued, renewed, denied, suspended, and revoked, by state license category.

(d) The number of appeals from the denial of state licenses or other disciplinary actions taken by the department and the average time spent on these appeals.

(e) The number of complaints submitted by citizens or representatives of cities or counties regarding licensees, provided as both a comprehensive statewide number and by geographical region.

(f) The number and type of enforcement activities conducted by the department and by local law enforcement agencies in conjunction with the department.

(g) The number, type, and amount of penalties, fines, and other disciplinary actions taken by the department.

(h) The number of licenses on which the department imposed conditions and the categories of conditions imposed on licenses.

(i) A detailed list of the petitions for regulatory relief or rulemaking changes received by the department from licensees requesting modifications of the enforcement of rules under this division.

(j) A list of interstate cannabis agreements entered into pursuant to Chapter 25 (commencing with Section 26300), including information regarding the terms and conditions of each agreement, the activities undertaken by state agencies to implement the agreement, and the effects of the agreement on California’s cannabis industry.

(k)

(1) For the first publication of the reports, the department shall provide a joint report to the Legislature regarding the state of the cannabis market in California. This report shall identify any statutory or regulatory changes necessary to ensure that the implementation of this division does not do any of the following:

(A) Allow unreasonable restraints on competition by creation or maintenance of unlawful monopoly power.

(B) Perpetuate the presence of an illegal market for cannabis or cannabis products in the state or out of the state.

(C) Encourage underage use or adult abuse of cannabis or cannabis products, or illegal diversion of cannabis or cannabis products out of the state.

(D) Result in an excessive concentration of licensees in a given city, county, or both.

(E) Present an unreasonable risk of minors being exposed to cannabis or cannabis products.

(F) Result in violations of any environmental protection laws.

(2) For purposes of this subdivision, “excessive concentration” means when the premises for a retail license, microbusiness license, or a license issued under Section 26070.5 is located in an area where either of the following conditions exist:

(A) The ratio of licensees to population in a census tract or census division exceeds the ratio of licensees to population in the county in which the census tract or census division is located, unless reduction of that ratio would unduly limit the development of the legal market so as to perpetuate the illegal market for cannabis or cannabis products.

(B) The ratio of retail licenses, microbusiness licenses, or licenses under Section 26070.5 to population in the census tract, division, or jurisdiction exceeds that allowable by local ordinance adopted under Section 26200.

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(Amended by Stats. 2022, Ch. 396, Sec. 2. (SB 1326) Effective January 1, 2023. Note: This section was added on Nov. 8, 2016, by initiative Prop. 64.)

Section § 26190.5

The law requires the relevant department to work with a specific cannabis research program to conduct a study focused on how cannabis affects people's motor skills.

The department shall contract with the California Cannabis Research Program, known as the Center for Medicinal Cannabis Research, and formerly known as the California Marijuana Research Program, authorized pursuant to Section 11362.9 of the Health and Safety Code, to develop a study that identifies the impact that cannabis has on motor skills.

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(Amended by Stats. 2021, Ch. 70, Sec. 83. (AB 141) Effective July 12, 2021.)

Section § 26191

This law requires the Office of State Audits and Evaluations within the Department of Finance to perform a performance audit of certain department activities every three years, starting on January 1, 2022. The findings from these audits must be reported to both the department and the Legislature by July 1. The report should cover the program's costs, how well enforcement programs are working, and comply with Government Code Section 9795. The Legislature must also ensure there are enough funds for these audits.

(a) Commencing January 1, 2022, and by January 1 triennially thereafter, the Office of State Audits and Evaluations within the Department of Finance shall conduct a performance audit of the department’s activities under this division, and shall report its findings to the department and the Legislature by July 1 of that same year. The report shall include, but not be limited to, the following:

(1) The actual costs of the program.

(2) The overall effectiveness of enforcement programs.

(3) Any report submitted pursuant to this section shall be submitted in compliance with Section 9795 of the Government Code.

(b) The Legislature shall provide sufficient funds to the Department of Finance to conduct the triennial audit required by this section.

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(Amended by Stats. 2021, Ch. 70, Sec. 84. (AB 141) Effective July 12, 2021. Note: This section was added on Nov. 8, 2016, by initiative Prop. 64.)